WORK FORCE BLOG -- SCOTT SUTTELL

Pay is going up, but so is the payroll tax

Blog Entry: January 08, 2013 10:43 AM | Author: SCOTT SUTTELL

ERC of Mayfield Village, a human resources organization serving members in Northeast Ohio, has compiled a handy and comprehensive guide that summarizes trends related to administering compensation and health care benefits.

The 2012/13 Salary and Benefits Budgeting Guide notes, for instance, that seven surveys — including one conducted by ERC — peg average projected pay increases for 2013 at 2.9% to 3.0%, up from a 2.7% to 2.8% average in the past few years. (Too bad the 2% increase in the payroll tax will wipe out most of the gain.)

Pay increases, though, “continue to be differentiated by performance,” according to ERC.

For instance, surveys conducted by Mercer and WorldatWork, in particular, show that “(h)igher-performing employees tend to receive higher pay increases above the average increase, while lower-performing employees tend to receive lower pay increases below the average increase.”

The percentage of employers not providing pay increases or freezing pay “continues to decline across nearly all compensation planning surveys,” ERC says. In its own survey, for example, “91% of employers are projecting providing pay increases in 2013.”

ERC also notes that a survey released by Towers Watson “shows that 88% of 440 employers surveyed are committed to offering health care benefits to their employees in the future, despite the new health care reform provisions which will provide alternative avenues for employees to obtain health care.”

Towers Watson also finds that the average total cost of health care is projected to rise by 5.3% in 2013 to $11,507 per employee — lower than the 2012 increase of 5.9%.

Glassman half full

“Ohio's economy will expand in 2013 at the fastest rate in more than 16 years, but growth will still remain slow and unemployment will not decline as sharply as it did in previous years,” The Dayton Daily News reports, based on a forecast by JPMorgan Chase & Co.'s commercial banking unit.

The forecasted increase in real GDP would be the largest since at least 1997. The last time Ohio's real GDP exceeded $443 billion was in 2005, according to U.S. Department of Labor data cited by The Dayton Daily News.

Ohio will add almost 97,000 jobs between November 2012 and December 2013, bringing total nonfarm payroll employment to 5.29 million, says Jim Glassman, managing director and senior economist with commercial banking at JPMorgan Chase.

The job growth will help push Ohio's unemployment rate to about 6.8% this year and 6.7% in 2014, Mr. Glassman tells the Dayton paper. Unemployment was about 7.2% in 2012, 8.6% in 2011 and 10%.

“People may not be overwhelmingly impressed by what happens in 2013, but I think it will be better than what happened in 2012,” Mr. Glassman said.

A step in the right direction

The Washington Monthlytakes a look at — and gives a critique of — a new job-creation effort in Ohio.

“One common complaint about American universities is that they are simply failing to train students for available jobs,” the magazine notes. “This is why graduates are unemployed; they don't know how to do what businesses really need. Critics suggest that it might be a little more complicated; the economy is bad. There simply may not be that many good jobs available.”

Splitting the difference, Ohio “has decided to just give some companies money to create jobs, sort of,” The Washington Monthly says. It cites this piece in The (Toledo) Blade that notes the Ohio Board of Regents “plans to distribute $11 million in seed money to 10 Ohio colleges and 13 public or private universities to create as many as 3,500 internships and co-ops at 1,500 businesses across the state.” (Casino licensing fees will pay for the project.)

Businesses including Cedar Fair and Owens Corning have agreed to contribute matching funds to hire interns and offer co-op opportunities.

“This is apparently part of an effort to keep college students in the state of Ohio once they graduate,” The Washington Monthly says. “Will it work? Perhaps. Research has shown that scholarship plans, which aim to keep students in state by offering them free or reduced college tuition, mostly don't work because college graduates pretty much go where the jobs are, no matter where they attend college.”

Still, the magazine concludes, “if Ohio really wants to keep graduates in state, it might be wise to consider the quality of these jobs. Giving money to businesses to promote internships and co-ops is a step in the right direction, but if colleges really want to keep graduates around, they're probably going to have to help students get real jobs, the kind with health care and benefit; an internship might not be good enough.”

Readers are solely responsible for the content of the comments they post here. Comments are subject to the site's terms and conditions of use and do not necessarily reflect the opinion or approval of Crain's Cleveland Business. Readers whose comments violate the terms of use may have their comments removed or all of their content blocked from viewing by other users without notification. Comments may be used in the print edition at editorial discretion.